Can I add that, during the most successful growth and expansion in recent US economic history (the 1950-1980 period) labor unions were at their strongest, taxes on the wealthy were at their highest, and conservative republicans like Richard Nixon were advocating domestic policies to the left of both Bill Clinton and Barack Obama?

What has happened in recent years is that tax and investment policies have shifted to help the wealthy make more money and keep more of it in their hot little well-manicured hands. This does not mean more jobs are created--nothing "trickles down" to the working class but right wing propaganda about how much the rich do for everyone.

My working class students support tax policies that protect the rich, even though those are the very policies screwing them and their families. Because, unlike their own parents, they are all going to become wealthy. Real soon. Once they pay off their student loans, get out of collection for uninsured medical bills and get their beater car running again so they can keep their two part-time food service jobs. The brainwashing from right wing radio and tv make Mao's cultural propaganda efforts look half-hearted.

Conservative low tax policies don't create more jobs. But they do allow more offshoring of investments, and lead to neglected infrastructure, less money for those public services everyone needs, and less disposable income in the pockets of the lower wage earners (who really do create more jobs by spending their money and stimulating their local economies).

Again, I can cite data to support this.

you forgot to thank barney frank, chris dodd and obumble for their "making home affordable" policy that ushered in the era of credit default swaps that lead to the sub-prime meltdown... which only cost hard working main street folks their entire life savings and will ultimately cost us taxpayers trillions... yep, that's trillions with a f'n 'T'...

Logged

When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him.

you forgot to thank barney frank, chris dodd and obumble for their "making home affordable" policy that ushered in the era of credit default swaps that lead to the sub-prime meltdown... which only cost hard working main street folks their entire life savings and will ultimately cost us taxpayers trillions... yep, that's trillions with a f'n 'T'...

^ I can see that you must get your information from FOX News or The Blaze or Dinesh Dsouza or some other questionable source. An easy review of information available on the web shows that you are greatly misinformed.

This shows you not only lack an understanding of what events caused the mortgage crisis, but also the order of them and where they began. The credit default swaps were a bad idea from the very beginning and when one financial institution started making waves with them other financial institutions decided to gamble the American economy by issuing them, as well. These instruments were specifically what caused the catastrophic losses at AIG. Worse, federal and state officials (was it a security product or an insurance product?) reluctantly refused to regulate them (aka kissed the ass of the financial community who put enough money in the right pockets to have such an ignorant assessment made).

Credit default swaps were created because somebody who loved risk was bored one day because they weren't getting enough of a high while staring at the numbers on the computer screen. CDSs were a dumb idea and every government official afterward who refused to declare that they should be regulated in some way is culpable in the financial crisis. This involves various officials of the New York Department of Financial Services and the Securities Exchange Commission.

~~~~

Instead of just blaming everything on liberal democratic whatever, why not do a some investigation, some reading, some contemplation, be skeptical of what you read or hear, ask questions of others and then decide what likely caused something else to happen?

I guess that would take some personal investment on your part. It's easier to just spew hate at liberal democratic whatever because you dislike whatever you think is represented by liberal democratic whatever. What's wrong with America is the number of citizens who don't care to investigate and understand some topics on their own. Instead, people who lack any personal investment in their own knowledge are used as tools by others who want to influence what happens in America, often to the detriment of those being used.

Logged

John 14:2 :: In my Father's house are many mansions: if it were not so, I would have told you. I go to prepare a place for you.

you forgot to thank barney frank, chris dodd and obumble for their "making home affordable" policy that ushered in the era of credit default swaps that lead to the sub-prime meltdown... which only cost hard working main street folks their entire life savings and will ultimately cost us taxpayers trillions... yep, that's trillions with a f'n 'T'...

yeah, forgot that right wing fantasy. Probably because it is not based in reality.

I had some conversations here about a year and a half ago with a guy who is legitimately insane. He happened to be rabid right wing supporter, but also was sure that events that happened to him 30 years ago were really portents of current politics. He said a similar thing as you in this post. You are both flat out wrong.

I can see that you must get your information from FOX News or The Blaze or Dinesh Dsouza or some other questionable source. An easy review of information available on the web shows that you are greatly misinformed.

This shows you not only lack an understanding of what events caused the mortgage crisis, but also the order of them and where they began. The credit default swaps were a bad idea from the very beginning and when one financial institution started making waves with them other financial institutions decided to gamble the American economy by issuing them, as well. These instruments were specifically what caused the catastrophic losses at AIG. Worse, federal and state officials (was it a security product or an insurance product?) reluctantly refused to regulate them (aka kissed the ass of the financial community who put enough money in the right pockets to have such an ignorant assessment made).

sorry, my bad... i responded on the fly via my iphone... i mentioned "making home affordable" which was incorrect. i was thinking the "community reinvestment act"... so i apologize for the wasted 2.5 seconds it took you to land on the "making home affordable" wiki page, (btw & fyi - in an effort to save any readers the same wasted time, the making home affordable act is a failed $75 billion gov't loan modification bailout program). but i appreciate your due diligence in typing those 3 words into the googly. but as i did mentioned dodd and frank, you should have suspected i was citing the wrong gov't initiative.

frank was a strong advocate in congress for using gov't authority to force lower underwriting standards in housing finance. he was successful in establishing what were called "affordable housing" (hence the mistake on my part mentioning 'making home affordable') requirements on fannie mae and freddie mac way back in the early 90's. which lead to no-doc underwriting and ultimately the sub-prime debacle. prior to that, frank, dodd and others thought the standard was too difficult for low income borrowers, they thought it would be a good idea to impose gov't quotas on fannie & freddy when they purchased loans from mortgage originators. the gov't even filed suit under this act to get banks to lower credit standards and approve high risk loans, and one of the plaintiff’s lawyers was obumble himself.

you forgot to thank barney frank, chris dodd and obumble for their "making home affordable" policy that ushered in the era of credit default swaps that lead to the sub-prime meltdown... which only cost hard working main street folks their entire life savings and will ultimately cost us taxpayers trillions... yep, that's trillions with a f'n 'T'...

yeah, forgot that right wing fantasy. Probably because it is not based in reality.

fine, at the end of the day it was greedy wallstreet bankers who sold a junk product... but if it wasn't for heavy handed gov't regulation forcing banks to underwrite $hit loans the wallstreet bankers wouldn't have had a junk product to sell...

Logged

When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him.

fine, at the end of the day it was greedy wallstreet bankers who sold a junk product... but if it wasn't for heavy handed gov't regulation forcing banks to underwrite $hit loans the wallstreet bankers wouldn't have had a junk product to sell...

no, sorry, you did not read the links. Wall Street invented the product. It was not the heavy handed government forcing banks to underwrite shit loans. Even your own wiki link (which is pretty thoroughly referenced) said that:

Quote

However, the Financial Crisis Inquiry Commission formed by the US Congress in 2009 to investigate the causes of the 2008 financial crisis, concluded that "the CRA was not a significant factor in subprime lending or the crisis".[111] ...According to Yellen, now current Chair of the Federal Reserve, independent mortgage companies made risky "higher-priced" loans at more than twice the rate of the banks and thrifts; most CRA loans were responsibly made, and were not the "higher-priced" loans that have contributed to the current crisis.... approximately 50% of subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made "perhaps one in four" sub-prime loans, and that "the worst and most widespread abuses occurred in the institutions with the least federal oversight".

You have it exactly backwards. Wall street banks pressured the government to relax the requirements for making loans because they thought they could make more money. And they did. The shit loans were their own making. And everyone was making so much money - the banks, the housing developers, the auditors, the bond ratings agencies, the mortgage insurers - that no one wanted to upset the apple cart.

I hoped you would be less recalcitrant and more open to correction than the mentally ill guy. I am quite disappointed.

Let me ask you a question. Do you want beliefs that accurately reflect reality? Because in order to do that, you will at some point have to admit you are wrong about something and update a belief or two. Because we all hold some inaccurate beliefs. If you go on holding beliefs that do a poor job of modeling reality, you will not be able to successfully predict future events. You will not be able to fix mistakes. You cannot be ideological about it.

You have it exactly backwards. Wall street banks pressured the government to relax the requirements for making loans because they thought they could make more money.

"The Financial Crisis Inquiry Commission issued three concluding documents in January 2011: 1) The FCIC "conclusions" or report from the six Democratic Commissioners; 2) a "dissenting statement" from the three Republican Commissioners; and 3) a second "dissenting statement" from Commissioner Peter Wallison. Both the Democratic majority conclusions and Republican minority dissenting statement, representing the views of nine of the ten commissioners, concluded that government housing policies had little to do with the crisis. The majority report stated that Fannie Mae and Freddie Mac "were not a primary cause of the crisis" and that the Community Reinvestment Act "was not a significant factor in subprime lending or the crisis."[1] The three Republican authors of their dissenting statement wrote: "Credit spreads declined not just for housing, but also for other asset classes like commercial real estate. This tells us to look to the credit bubble as an essential cause of the U.S. housing bubble. It also tells us that problems with U.S. housing policy or markets do not by themselves explain the U.S. housing bubble."

"However, Commissioner Wallison's dissenting statement did place the blame squarely on government housing policies, which in his view contributed to an excessive number of high-risk mortgages: "...I believe that the sine qua non of the financial crisis was U.S. government housing policy, which led to the creation of 27 million subprime and other risky loans—half of all mortgages in the United States—which were ready to default as soon as the massive 1997-2007 housing bubble began to deflate. If the U.S. government had not chosen this policy path—fostering the growth of a bubble of unprecedented size and an equally unprecedented number of weak and high risk residential mortgages—the great financial crisis of 2008 would never have occurred."

if there's one truth in this existence it's... there's always two sides to every story. while the FCIC concludes that fannie & freddie along with the community reinvestment act did not play a significant role in the crisis, i tend to believe commissioner wallison's statement placing the blame squarely on government housing policies. so, no update to by belief system is required... but thaaaaaaannnnnnkkkkkssssss for your concern.

Logged

When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him.

Rush talked a lot about how the big, bad liberal government forced the poor innocent banks to fork all their mortgage money over to millions of greedy undeserving shiftless (minority) people, who although living large on their generous welfare checks and stolen food stamps, somehow could not afford to pay for the mansions the banks gave them. Spent it all on big screen tv's, Ford Escalades, crack and barbecue.

That is what led to the global economic meltdown, when the over-regulated, hamstrung financial sector finally ran out of money to give to these irresponsible lazy people at government gunpoint. It got so bad, the Wall Street MBA's were scraping by on minimum wage, I tell ya.

How quickly we forget that George Bush Jr thought it was super fantastically great that everyone, no matter how low income, could buy a house in the new "ownership society" created by deregulation of the financial and real estate sectors. Banks and realtors were putting anyone who could sign their name into a mortgage without even running credit checks, and then selling the shaky mortgage to someone else as fast as they could. At the time I said to people, you know, maybe you should just rent-- but that was considered a commie, un-American sentiment!

Did anyone think that was a good business model? Or was it always meant to be a pyramid scheme, where the last one holding got burned? Remember how those fly-by-night firms were bundling bad mortgages and selling them to each other like a game of hot potato? Remember sub-prime lending? How was that the government's fault, other then looking the other way on sensible regulation?

After the Great Depression in the 1930's, banks were not supposed to speculate with people's money anymore. Banks were supposed to be kept separate from high-risk investment firms, and the laws required that things stayed that way. And in the 50's, 60's and 70's banking was safe, and risky investing was kept separate, only for high rollers who could afford to lose money.

Then, starting in the 1980's some people decided that was stupid, that money was money and making more money was better than making less. So the big de-regulation of banking and finance began. And some people made lots of money gambling with other people's savings and retirement money.

We have forgotten the Keating Five, and the over 700 savings and loan institutions that collapsed in the 1980's. That was the first warning that the financial sector needed more, not less regulating. http://en.wikipedia.org/wiki/Keating_Five

A quote from that article: "savings and loan associations had been deregulated in the early 1980s, allowing them to make highly risky investments with their depositors' money." And those depositors lost their life savings.

In the 1990's I worked with man in his 60's who thought, after a career in the military, he would be able to retire on his savings. He lost everything in the savings and loan collapse and his wife left him. I had never met anyone who, literally, had lost his life savings overnight, and it had been in what he had thought was a safe place. At retirement age, with a bad heart condition, he had to keep working. Indefinitely. He had been a conservative until that happened, and he was still struggling to understand how he had played by the rules and gotten so screwed.

Remember how the financial firms have continued to give generous bonuses in the hundreds of thousands to the very same executives who orchestrated the economic collapse? Even as people were losing their homes and the spin off industries from the housing market tanked?

I am amazed at how short people's memories are sometimes. And how easy it is to scapegoat the people who end up losing the most, instead of focusing on the powerful, who screw up and still manage to skate away with their money intact.

"However, Commissioner Wallison's dissenting statement did place the blame squarely on government housing policies, which in his view contributed to an excessive number of high-risk mortgages: "...I believe..."

"I believe"? The whole thing hinges on "I believe"? Not data? Not an actual analysis? No. It is just ideology.

and the wall street journal.and business weekly.and Nobel winning economists.and a whole host of other sources.

That's part of your problem, frank. You selected only the opinions that supported your prior belief. It is called confirmation bias. That is a common human problem, but especially one amongst conservatives lately. It is why they were so shocked when the Romneybot was defeated by the KenyanIslamoSocialist Usurper. Their tears were delicious.

But when you bury your head in the sand like that, it prevents you from implementing policies that will produce the outcomes you want. Instead you get a kind of faith-based policy where you keep beating your head against a wall, hoping things will be different this time. But they won't.

When I'd first heard the tripe you are repeating here, I had no idea whether it was true. If it was, then I wanted to believe it. But if it was not true, then I did not want to believe it. I didn't care about ideology. I just wanted the right answer.

so, no update to by belief system is required... but thaaaaaaannnnnnkkkkkssssss for your concern.

I overestimated you. My mistake. I have updated my belief system regarding you.

Also, your slow-motion "thanks" comes off as kind of assholish. Particularly since I was genuinely trying to help you. I dunno if you meant it that way. I'd like to give you the benefit of the doubt. But having updated my belief system, I think it is more probable that you did mean it that way.

"However, Commissioner Wallison's dissenting statement did place the blame squarely on government housing policies, which in his view contributed to an excessive number of high-risk mortgages: "...I believe..."

"I believe"? The whole thing hinges on "I believe"? Not data? Not an actual analysis? No. It is just ideology.

and the wall street journal.and business weekly.and Nobel winning economists.and a whole host of other sources.

That's part of your problem, frank. You selected only the opinions that supported your prior belief. It is called confirmation bias. That is a common human problem, but especially one amongst conservatives lately. It is why they were so shocked when the Romneybot was defeated by the KenyanIslamoSocialist Usurper. Their tears were delicious.

But when you bury your head in the sand like that, it prevents you from implementing policies that will produce the outcomes you want. Instead you get a kind of faith-based policy where you keep beating your head against a wall, hoping things will be different this time. But they won't.

When I'd first heard the tripe you are repeating here, I had no idea whether it was true. If it was, then I wanted to believe it. But if it was not true, then I did not want to believe it. I didn't care about ideology. I just wanted the right answer.

so, no update to by belief system is required... but thaaaaaaannnnnnkkkkkssssss for your concern.

I overestimated you. My mistake. I have updated my belief system regarding you.

Also, your slow-motion "thanks" comes off as kind of assholish. Particularly since I was genuinely trying to help you. I dunno if you meant it that way. I'd like to give you the benefit of the doubt. But having updated my belief system, I think it is more probable that you did mean it that way.

wait just a goddamn minute... 9 out of 10 commissioners conclude/believe that fannie and freddie had minor roles in the meltdown... and one concluded/believes that gov't policy did play a major role... BASED ON THE SAME DATA, THEY CAME TO DIFFERENT CONCLUSIONS... weird how that works... so you're basically saying that when the facts lead to differing opinions, the majority opinion is ALWAYS correct, and the minority opinion is only held by blind ideologues... that's a dangerous area of the forest to live...

it's interesting that you state you "overestimated" me, because i did not overestimate you in the slightest. weird how that works too... you update your belief system regarding me - and i knew exactly who you are from the first post... no updating required on my end.

i am sorry that you took my slow-motion "thanks" as assholish... i didn't mean it that way. but please feel free to let me know if there's anything further i can help you with.

if there's one truth in this existence it's... there's always two sides to every story. while the FCIC concludes that fannie & freddie along with the community reinvestment act did not play a significant role in the crisis, i tend to believe commissioner wallison's statement placing the blame squarely on government housing policies. so, no update to by belief system is required... but thaaaaaaannnnnnkkkkkssssss for your concern.

So, you tend to believe someone who was in the minority of the minority? Even though his conclusions were largely rejected even by the other Republicans on the FCIC panel? Here's what they wrote: "Credit spreads declined not just for housing, but also for other asset classes like commercial real estate. This tells us to look to the credit bubble as an essential cause of the U.S. housing bubble. It also tells us that problems with U.S. housing policy or markets do not by themselves explain the U.S. housing bubble."

Wallison, by comparison, wrote: "When the bubble began to deflate in mid-2007, the low quality and high risk loans engendered by government policies failed in unprecedented numbers. The effect of these defaults was exacerbated by the fact that few if any investors—including housing market analysts—understood at the time that Fannie Mae and Freddie Mac had been acquiring large numbers of subprime and other high risk loans in order to meet HUD’s affordable housing goals."

It seems to me that you've fallen into the trap of confirmation bias - only accepting things that jive with what you already think is true, and disregarding anything that contradicts it. In fact, Wallison appears to have been the primary person pushing the idea that Fannie Mae and Freddie Mac were responsible for the financial crisis. His information comes from Edward Pinto (a fellow at the American Enterprise Institute, a conservative think tank), the former CCO for Freddie Mac until the late 1980s. You'll note the 20-year gap between when he actually worked for the company and when the financial crisis actually happened, leading me to take his conclusions with a hefty pinch of salt.

According to McClatchy Newspapers, Freddie Mac and Fannie Mae went from holding 48% of subprime mortgages in 2004 to holding 24% in 2006. Private firms had also securitized almost two-thirds of all US mortgages by that year, as well. Furthermore, according to data from the Federal Reserve Board, by 2006, six of every seven subprime mortgages - nearly 85% - were issued by private firms. And finally, only one of the top 25 subprime lenders of that year was subject to governmental housing laws.

In short, the data speaks for itself; Wallison's conclusions are false, and it is the unregulated private firms which were primarily responsible for the housing crisis, not Freddie Mac and Fannie Mae.

wait just a goddamn minute... 9 out of 10 commissioners conclude/believe that fannie and freddie had minor roles in the meltdown... and one concluded/believes that gov't policy did play a major role...

9 out of 10. And yet you go with the sole dissenter. Funny, that. Is that normally what you do? Or do you only do that when you happened to agree with them at the outset? Do you think that is the safe area of the forest to be wandering in?

Yes. It is interesting. I am apparently an optimist. I like to start with the premise that the individual with whom I am dealing is a moral, honest, relatively intelligent person who deserves my respect, until proven otherwise. This despite the improbability of it. I think that is the generous thing to do.

Please do not take this to mean I think you are immoral, dishonest, unintelligent and unworthy of my respect. That is not what I am saying. It is a sliding scale, not a binary switch. I overshot on at least one of those categories.

That is called a Non-Apology Apology. You say you are sorry for something I did. It is a disingenuous tactic that eschews responsibility and attempts to shift it to the aggrieved party.

If it were me, I would have said something that takes responsibility for my actions like, "I'm am sorry for that. That is not how I meant it, but I can see how it could be taken that way." I think you see the difference.

I am not surprised. Setting modesty aside for a moment, it is difficult to overestimate me.

Not when One is better than you...

Logged

The truth is absolute. Life forms are specks of specks (...) of specks of dust in the universe.Why settle for normal, when you can be so much more? Why settle for something, when you can have everything?We choose our own gods.

ok, wait... what? did you forget i posted what wallison wrote... and you post it again. now i'm confused. listen, things aren't always cut and dry, day and night, earth and sky (k, now i'm recalling song lyrics from some 90's band...) if you wish i'll concede that the housing crises was 74% regulated, but unregulated private firms and 26% poor gov't policy designed to encouraged home ownership which led to poor underwriting. but those percentages could be +/- a few...

Logged

When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him.

Please do not take this to mean I think you are immoral, dishonest, unintelligent and unworthy of my respect. That is not what I am saying. It is a sliding scale, not a binary switch. I overshot on at least one of those categories.

sliding scale huh... k, can you show me this scale...? are there other categories besides morality, honesty and intelligence on your scale...?

and getting back to the original topic of the sub-prime debacle... earlier you made this comment below:

frank was a strong advocate in congress for using gov't authority to force lower underwriting standards in housing finance. he was successful in establishing what were called "affordable housing" (hence the mistake on my part mentioning 'making home affordable') requirements on fannie mae and freddie mac way back in the early 90's. which lead to no-doc underwriting and ultimately the sub-prime debacle. prior to that, frank, dodd and others thought the standard was too difficult for low income borrowers, they thought it would be a good idea to impose gov't quotas on fannie & freddy when they purchased loans from mortgage originators. the gov't even filed suit under this act to get banks to lower credit standards and approve high risk loans, and one of the plaintiff’s lawyers was obumble himself.

i understand that this information is probably new to you because how could you know about this with your eyeballs duct taped to the rachel maddow show 24/7.

I watch Rachel Maddow often. She provides great investigations and explanations. She's often comedic at the same time.

However, I didn't get any info from Rachel about this. I didn't need to -- I knew what went wrong long before Rachel did. I have a bachelors degree in finance, and I have worked in the financial services industry for over 26 years. I hold licenses for insurance and securities, and I used to hold a mortgage lending license until I let that one terminate 3 years ago due to the mortgage mess (why continue spending $2500/year on a license when nobody is eligible?). So, I am not a newby, uneducated or unaware.

The no-doc underwriting didn't come from a government mandate -- it came from the expediency of technology. A no-doc loan doesn't mean that there is no documentation whatsoever. Their is plenty, actually, but that documentation can be meaningless.

The "no doc" part refers to an individual's sources of income and/or assets that will be used to purchase a home. A person who applies for a no-doc loan either doesn't want to reveal his/her income (typically because they make a lot and want to keep it quiet), has sporadic income (seasonal work, entertainers) or would not qualify for the loan if they actually provided the documentation (whoops!). So while the first two are typically high-wage earners, that last one sometimes is not. The last category is not just poor people applying for mortgages -- its for people applying for mortgages they cannot afford to pay back regardless of their income level. The rule of thumb is that you can afford up to 3x your annual salary for a mortgage. So if you make $100K you can afford a $300K mortgage. It's not a good idea to hit the 300% level but you certainly never want to go over it. Using that last category of no-doc qualifiers, plenty of applicants ended up going well over 300%.

When you call to qualify for a loan a mortgage broker will start the process by asking you basic information (name/address/dob/ssn) and do an instant spot check on whether your credit score qualifies you for a loan and which type, then their system will show which interest rate you'll get. Unless you want to provide additional proof about your finances to try to get a better deal, you will end up in your original slot as a no-doc loan.

Real estate agents have an incentive to sell a house for more than the asking price -- they get a commission and the seller is happy. Mortgage brokers have an incentive to sell more, longer and larger mortgages because they also get a commission on the amount financed. Together, these two groups can team up to wreak havoc on the financial system of a country. For example, when I bought my house back in 2000, the real estate agents were encouraging buyers to offer more than the asking price for a home with the reasoning that these places are going fast and we know others buyers will bid up the price. Why would you ever pay more for a house than what the seller is asking for it? There is no reason to do that. Never do that. However, real estate agents conned buyers into offering more than the asking price or to get into bidding wars. Fine. That's their job for the seller.

But, here's the real twist ... the only way you can afford to offer more for a house is if you qualify for a lower interest rate or a longer term or a different type of loan such as ARMs or interest-only mortgages. A small downward adjustment of the interest rate can make a higher offer on a house look very tempting. Put a bunch of real estate agents, mortgage brokers and their favorite appraisers together in a group meeting (or at a fully-stocked bar at happy hour) to chat about how no one is auditing anything, and you have the recipe for disaster.

I witnessed many buyers purchase homes that were not within their financial means. I saw people making $100K buying a house for $600K with a $500K mortgage. Greed? Probably. Low-income beneficiaries of government largesse? Definitely not. Between the real estate agents, the mortgage brokers and the appraisers, I heard people being told that their house will continue to appreciate 20-30% each year, and then you can refinance this 2yr ARM to a 30yr mortgage because you will have substantial equity in the house. I saw mortgage brokers falsify applications by stating that people made more money than they actually did or worked at places where they never worked -- all because they had great credit scores or the mortgage companies made lending at great rates sooo easy to obtain.

The financial crisis happened because of greed, and it happened without any internal or external oversight, no checks and balances. Many of the big lenders and lots of smaller lenders engaged in this activity. No-doc loans allowed mortgage brokers to flat-out lie on applications -- but better than that they could often lie or fudge documented loans because nobody was auditing them. This house sold for $450,000 in 2004 and your appraisal now shows $800,000 in 2006? Yeah, that's a gigantic red flag that everyone was happily driving by. Mortgage companies were in no way whatsoever forced to provide these loans. They did so out of their own greed. Period.

You can cry all you want about liberal democratic whatever but this was pure greed, and I'm betting that a lot of the people in charge of the big greed machines were not liberal democrats.

perhaps you should get out of the house a bit more... a little less virtual reality and a bit more reality, reality... sorry to let you down, but as screwtape has mentioned, people only want to believe or listen to whatever it is that fits their particular worldview... what did you call that again screwtape...? oh, confirmation bias... yes, that's what you have.

Logged

When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him.

The truth is absolute. Life forms are specks of specks (...) of specks of dust in the universe.Why settle for normal, when you can be so much more? Why settle for something, when you can have everything?We choose our own gods.

frank was a strong advocate in congress for using gov't authority to force lower underwriting standards in housing finance. he was successful in establishing what were called "affordable housing" (hence the mistake on my part mentioning 'making home affordable') requirements on fannie mae and freddie mac way back in the early 90's. which lead to no-doc underwriting and ultimately the sub-prime debacle. prior to that, frank, dodd and others thought the standard was too difficult for low income borrowers, they thought it would be a good idea to impose gov't quotas on fannie & freddy when they purchased loans from mortgage originators. the gov't even filed suit under this act to get banks to lower credit standards and approve high risk loans, and one of the plaintiff’s lawyers was obumble himself.

i understand that this information is probably new to you because how could you know about this with your eyeballs duct taped to the rachel maddow show 24/7.

I watch Rachel Maddow often. She provides great investigations and explanations. She's often comedic at the same time.

However, I didn't get any info from Rachel about this. I didn't need to -- I knew what went wrong long before Rachel did. I have a bachelors degree in finance, and I have worked in the financial services industry for over 26 years. I hold licenses for insurance and securities, and I used to hold a mortgage lending license until I let that one terminate 3 years ago due to the mortgage mess (why continue spending $2500/year on a license when nobody is eligible?). So, I am not a newby, uneducated or unaware.

The no-doc underwriting didn't come from a government mandate -- it came from the expediency of technology. A no-doc loan doesn't mean that there is no documentation whatsoever. Their is plenty, actually, but that documentation can be meaningless.

The "no doc" part refers to an individual's sources of income and/or assets that will be used to purchase a home. A person who applies for a no-doc loan either doesn't want to reveal his/her income (typically because they make a lot and want to keep it quiet), has sporadic income (seasonal work, entertainers) or would not qualify for the loan if they actually provided the documentation (whoops!). So while the first two are typically high-wage earners, that last one sometimes is not. The last category is not just poor people applying for mortgages -- its for people applying for mortgages they cannot afford to pay back regardless of their income level. The rule of thumb is that you can afford up to 3x your annual salary for a mortgage. So if you make $100K you can afford a $300K mortgage. It's not a good idea to hit the 300% level but you certainly never want to go over it. Using that last category of no-doc qualifiers, plenty of applicants ended up going well over 300%.

When you call to qualify for a loan a mortgage broker will start the process by asking you basic information (name/address/dob/ssn) and do an instant spot check on whether your credit score qualifies you for a loan and which type, then their system will show which interest rate you'll get. Unless you want to provide additional proof about your finances to try to get a better deal, you will end up in your original slot as a no-doc loan.

Real estate agents have an incentive to sell a house for more than the asking price -- they get a commission and the seller is happy. Mortgage brokers have an incentive to sell more, longer and larger mortgages because they also get a commission on the amount financed. Together, these two groups can team up to wreak havoc on the financial system of a country. For example, when I bought my house back in 2000, the real estate agents were encouraging buyers to offer more than the asking price for a home with the reasoning that these places are going fast and we know others buyers will bid up the price. Why would you ever pay more for a house than what the seller is asking for it? There is no reason to do that. Never do that. However, real estate agents conned buyers into offering more than the asking price or to get into bidding wars. Fine. That's their job for the seller.

But, here's the real twist ... the only way you can afford to offer more for a house is if you qualify for a lower interest rate or a longer term or a different type of loan such as ARMs or interest-only mortgages. A small downward adjustment of the interest rate can make a higher offer on a house look very tempting. Put a bunch of real estate agents, mortgage brokers and their favorite appraisers together in a group meeting (or at a fully-stocked bar at happy hour) to chat about how no one is auditing anything, and you have the recipe for disaster.

I witnessed many buyers purchase homes that were not within their financial means. I saw people making $100K buying a house for $600K with a $500K mortgage. Greed? Probably. Low-income beneficiaries of government largesse? Definitely not. Between the real estate agents, the mortgage brokers and the appraisers, I heard people being told that their house will continue to appreciate 20-30% each year, and then you can refinance this 2yr ARM to a 30yr mortgage because you will have substantial equity in the house. I saw mortgage brokers falsify applications by stating that people made more money than they actually did or worked at places where they never worked -- all because they had great credit scores or the mortgage companies made lending at great rates sooo easy to obtain.

The financial crisis happened because of greed, and it happened without any internal or external oversight, no checks and balances. Many of the big lenders and lots of smaller lenders engaged in this activity. No-doc loans allowed mortgage brokers to flat-out lie on applications -- but better than that they could often lie or fudge documented loans because nobody was auditing them. This house sold for $450,000 in 2004 and your appraisal now shows $800,000 in 2006? Yeah, that's a gigantic red flag that everyone was happily driving by. Mortgage companies were in no way whatsoever forced to provide these loans. They did so out of their own greed. Period.

You can cry all you want about liberal democratic whatever but this was pure greed, and I'm betting that a lot of the people in charge of the big greed machines were not liberal democrats.

why not do a some investigation, some reading, some contemplation, be skeptical of what you read or hear, ask questions of others and then decide what likely caused something else to happen?

to my fellow wwgha forum members ??? is this statement above, considering the context, irony...?

I've done a lot of reading, contemplating and understanding, far more than you have. It's part of my job. Every day.

It's Edith's job to bring you a beer every day when you get home.

alright alright alright... you seem like a nice level headed person chronos... and you know what. i think we totally agree on most things concerning the housing crises... for sure we agree that greed was the main culprit. so let's take a turn, to quote gordon gekko "greed is good"... o.k. I AM not saying I believe greed is good, but let's say someone said - well, my worldview is that you only go around once and if i see an opportunity to take advantage of a situation that has the potential to greatly enrich myself, which in turn buys me freedom... why not take a calculated risk, even at the peril of others who might be financially ruined by my tactics. after all, does the lion contemplate the feelings of the antelope before it rips its throat out...? why should the human animal be any different... of course i realize living in a polite society requires certain behaviors otherwise you might land yourself in jail... but if you're a wall street banker, and the risk of jail is next to nothing, why not take advantage of the weaker less sophisticated players and make yourself some giant coin... i dunno... oh, and don't give me the "golden rule" bs or any other take on faux morality... oh, edit here... i also wanted to say none of that "empathy" crap either... let's just say this person believes empathy is for losers...

« Last Edit: July 31, 2014, 05:16:22 PM by frank callaway »

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When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him.

hey OAA - no hard feelings man, i do really love you man, in fact i love everybody. and even if that means you're gonna give me another -darwin point... so be it. it's worth a million -darwin points...

Logged

When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him.

hey OAA - no hard feelings man, i do really love you man, in fact i love everybody. and even if that means you're gonna give me another -darwin point... so be it. it's worth a million -darwin points...

Given that you're a psychopath, as per the quote below, I find that hard to believe.

i dunno... oh, and don't give me the "golden rule" bs or any other take on faux morality... oh, edit here... i also wanted to say none of that "empathy" crap either... let's just say this person believes empathy is for losers...

Can't love anything but yourself if you don't empathize. Also, the fact that you honestly though you had made me lose my cool when I smited you, proves you're like other theist republican psychopaths. I'll leave it at that because rules.You know, if I could, I'd fix your brain damage. Then you'd know what you were missing out on by not empathizing. The fact that you can't empathize means you will never understand it... Poor thing. I pity you.

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The truth is absolute. Life forms are specks of specks (...) of specks of dust in the universe.Why settle for normal, when you can be so much more? Why settle for something, when you can have everything?We choose our own gods.

hey OAA - no hard feelings man, i do really love you man, in fact i love everybody. and even if that means you're gonna give me another -darwin point... so be it. it's worth a million -darwin points...

Given that you're a psychopath, as per the quote below, I find that hard to believe.

i dunno... oh, and don't give me the "golden rule" bs or any other take on faux morality... oh, edit here... i also wanted to say none of that "empathy" crap either... let's just say this person believes empathy is for losers...

Can't love anything but yourself if you don't empathize. Also, the fact that you honestly though you had made me lose my cool when I smited you, proves you're like other theist republican psychopaths. I'll leave it at that because rules.You know, if I could, I'd fix your brain damage. Then you'd know what you were missing out on by not empathizing. The fact that you can't empathize means you will never understand it... Poor thing. I pity you.

wow dude, that whole quote you just attributed to me was totally taken out of context. what you quoted was a hypothetical situation designed to stimulate conversation, which is the purpose of this forum. go back, read my post again, you'll notice i predicated the post specifically with the statement that i did not personally hold these views. i can only conclude that you are dilibritly mis-quoting me with malice.

screwtape... little help here

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When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him.

ok, wait... what? did you forget i posted what wallison wrote... and you post it again.

No, you posted from one part of the wiki page you linked, and I posted from another. They were two different statements and thus both valid. Did you even think to compare the two?

Quote from: frank callaway

now i'm confused. listen, things aren't always cut and dry, day and night, earth and sky (k, now i'm recalling song lyrics from some 90's band...) if you wish i'll concede that the housing crises was 74% regulated, but unregulated private firms and 26% poor gov't policy designed to encouraged home ownership which led to poor underwriting. but those percentages could be +/- a few...

It's obvious you're a bit confused, because your post is confusing and doesn't really follow from what I wrote. Most of the subprime mortgages were made by unregulated lenders. I don't know the exact numbers, but based on the fact that Freddie Mac and Fannie Mae were only holding 24% of all subprime mortgages by 2006, and unregulated lenders made about 6/7 of the loans that year, I can't see those numbers having shifted meaningfully by 2008, when things really went to pot. What that means is that the vast majority of the subprime mortgages were done by companies which were totally unregulated by the government. In short, it was not primarily or even mostly due to governmental policy; it was primarily due to lack of government regulation of that market. You may note that Wallison never admitted anything of the sort, instead doing his utmost to cast the lion's share of the blame onto Freddie Mac and Fannie Mae (and by extension the government).

ne has to resort to public opinion in an effort to solidify a position. and forbs is typically pretty neutral, maybe a little right of center

I'd disagree there. That article starts off as an attempted indictment of defined benefits pensions and ends as almost a parody of the reactionary right. Choice example:

Quote from: Louis Woodhill

Liberal programs created America’s urban underclass, and they perpetuate it by encouraging and sustaining a breathtaking progressive social innovation called the “zero parent family.”

The notion that there was no such thing as an urban underclass prior to the New Deal or the Great Society is so delightfully ignorant that it doesn't even warrant its own refutation. The gentlemanly thing to do here is point and laugh.

you forgot to thank barney frank, chris dodd and obumble for their "making home affordable" policy that ushered in the era of credit default swaps that lead to the sub-prime meltdown... which only cost hard working main street folks their entire life savings and will ultimately cost us taxpayers trillions... yep, that's trillions with a f'n 'T'...

Why do so many conservatives insist on using popsicle stick level puns in place of President Obama's name? Obummer, Obumble? Fuck out of here with that corny shit. Anyway, on to the substance:

i mentioned "making home affordable" which was incorrect. i was thinking the "community reinvestment act"... so i apologize for the wasted 2.5 seconds it took you to land on the "making home affordable" wiki page, (btw & fyi - in an effort to save any readers the same wasted time, the making home affordable act is a failed $75 billion gov't loan modification bailout program). but i appreciate your due diligence in typing those 3 words into the googly. but as i did mentioned dodd and frank, you should have suspected i was citing the wrong gov't initiative.

I've heard this claim made before. I found it pretty easy to gather that you were referring to the Community Reinvestment act in your previous post, despite your error. Anyway, these sorts of claims have been made by many conservatives following the crash and I just don't think there's any merit to them. Here is some liberal propaganda that takes Wallison's claims and disassembles them point by point.

The fact of the matter is that there just isn't much actual data to support the notion that the CRA or the GSEs are responsible for the housing collapse, which is why folks on the right that make that claim have to distort the facts so heavily to arrive at that conclusion.

You're wrong on just about every point here. This case was about Citibank discriminating against loan applicants on the basis of race. The suit was not brought by the government. It was brought by private citizens who hired the services of a private law firm where President Obama did indeed after graduating law school.[1] They were not arguing that Citibank should lower its standards. They were arguing that Citibank ought to apply those standards equally regardless of the color of the applicant. More to the point, the case was argued using existing legislation that precedes any alterations to the CRA that you're citing by several decades. But maybe I'm wrong. Would you care to cite your source here?

I guess that's all I feel like writing for now. Actually, one more thing:

wow dude, that whole quote you just attributed to me was totally taken out of context. what you quoted was a hypothetical situation designed to stimulate conversation, which is the purpose of this forum. go back, read my post again, you'll notice i predicated the post specifically with the statement that i did not personally hold these views. i can only conclude that you are dilibritly mis-quoting me with malice.

screwtape... little help here

Yeah, that was a bullshit move on OAA's part. It was very clear in that post that you were assuming the morality of Gordon Gecko for a rhetorical point rather than espousing it as your actual view.

Yeah, that was a bullshit move on OAA's part. It was very clear in that post that you were assuming the morality of Gordon Gecko for a rhetorical point rather than espousing it as your actual view.

Not to me, due to frank callaway poor English skills. I stand by my claim, as I stand by my other one.

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The truth is absolute. Life forms are specks of specks (...) of specks of dust in the universe.Why settle for normal, when you can be so much more? Why settle for something, when you can have everything?We choose our own gods.

so let's take a turn, to quote gordon gekko "greed is good"... o.k. I AM not saying I believe greed is good, but let's say someone said - well, my worldview is that you only go around once and if i see an opportunity to take advantage of a situation that has the potential to greatly enrich myself, which in turn buys me freedom... why not take a calculated risk, even at the peril of others who might be financially ruined by my tactics.